A division bench of the Delhi High Court, while dismissing a petition by ERNST AND YOUNG U.S. LLP, has held that an order under section 143(1) of the Income Tax Act, 1961 is not an “assessment”.
The Petitioner contended that the amount received by it from S.R. Batliboi & Co LLP was not taxable in India by reason of Article 15 of Double Taxation Avoidance Agreement and the said position had been examined and accepted by the Respondent in subsequent assessment year 2019-20. It was contended that an order dated 13th April 2022 under Section148A(d) of the Act was passed by Respondent on the erroneous footing that the Petitioner had not filed a reply to the Show Cause Notice and further stated that the Petitioner had not objected to the re-opening of its assessments.
According to the petitioners, the Respondent-Revenue completely failed to appreciate that it had itself accepted the Petitioner’s claim with regard to professional charges received from S.R. Batliboi& Associates LLP in the present assessment year by making an assessment under Section 143(1) of the Act. It was their contention that an order passed under Section 143(1) of the Act accepting the Income Tax Return filed by the assessee and determining the taxable income of the assessee is an assessment with consequences.
Justice Manmohan and Justice Manmeet Pritam Singh Arora held that the order passed under Section 143(1) of the Act is not an assessment for the purposes of Section 147 of the Act. Further, it is not necessary in such a case for the Assessing Officer to come across some fresh tangible material to form a belief that income has escaped assessment.
“The scrutiny assessment for assessment year 2019-20 also offers no assistance to the petitioner, as the petitioner did not place on record any documents such as Contract Agreement under which such transactions were carried out, copy of original invoices (not just invoice breakup) to show that the services rendered by the petitioner during assessment year 2018-19 were identical/similar to the services rendered to M/s Batliboi& Associates LLP in the assessment year 2019-20,” the Court said.
Dismissing the petition, the Court held that “Needless to state that if petitioner is able to satisfy the Assessing Officer that the services rendered in the present assessment were similar/identical to the services rendered in the assessment year 2019-20, the re-assessment proceedings would be closed.”
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
